What You Need to Know About Custody, Segregation & Investor Protection

When you open an account with Mega Equity Securities & Financial Services Public Ltd through J. Knobel Investor Services Limited, your assets are handled under strict EU regulatory standards — including MiFID II and CySEC rules.

This page explains how your investments are safeguarded, what protections exist, and under what circumstances you could still face losses.

1. Segregation of Client Assets

Mega Equity holds all client cash and financial instruments in segregated accounts, separate from its own corporate funds.

This means:

• Securities (e.g. stocks, bonds, ETFs) are not on the CIF’s balance sheet and are held with licensed custodians or clearing agents

• Client money is kept in designated accounts at approved banks, not used for CIF operations

Segregation significantly reduces the risk of loss if the CIF becomes insolvent, but it does not eliminate all risk — particularly in extreme or unforeseen events.

2. The Investor Compensation Fund (ICF)

Mega Equity is a member of the Investor Compensation Fund (ICF), which provides limited protection for eligible retail clients if the CIF fails to return assets.

ICF Coverage:

• Applies only if the CIF is unable to fulfill its obligations

• Covers eligible claims up to €20,000 per client

• Focuses on cash and financial instruments that cannot be returned

• Does not cover losses due to investment performance or market risk

Practical Scenarios

✅ Scenario A – Client Assets Fully Returned

• €10,000 in cash

• €300,000 in securities

If Mega Equity were to cease operations but client assets are properly segregated and traceable:

• Securities are returned or transferred

• Cash is returned in full

No compensation claim would be needed, as no loss occurred.

⚠️ Scenario B – Loss of Client Cash Due to CIF Default

• €50,000 in cash, pending investment

• €250,000 in securities

If, in the event of CIF insolvency, client cash was mishandled or not properly safeguarded (e.g., misused by the firm or lost due to third-party failure):

• The client could lose part or all of the €50,000

• The ICF may compensate only up to €20,000 (subject to eligibility)

Result: The client could suffer a cash loss of €30,000 or more that is not recoverable through the ICF.

🔍 This is why clients are advised not to hold large idle cash balances in investment accounts and to use such accounts primarily for securities trading and custody.

⚠️ Important Risk Factors to Keep in Mind

• ICF is not insurance and is limited in coverage

• Securities may be delayed in transfer or return if recordkeeping or segregation fails

• Losses due to market risk, poor investment choices, or third-party custodians are not covered by the ICF

• Compensation is subject to eligibility checks, documentation, and legal procedures

✅ Regulatory Protections in Place

Need Help Understanding This?

Our team at J. Knobel Investor Services Limited is available to guide you through the account-opening process and help you understand how your assets are protected.

Email: info@jknobel.com

Phone: +357 22258790